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Starting with the basic rate of tax, 20%, the UK government deducts 10% and the Scottish government adds its own amount back on (at the moment this is 10%). In effect, Scottish basic rate taxpayers pay 10% to the UK government and 10% to the Scottish government.

At the moment, these deductions and additions are the same for all Income Tax rates:

Tax rate

UK rate of Income Tax

UK government deduction

Scottish government addition

Scottish rate of Income Tax

Basic rate

20%

10%

10%

20%

Higher rate

40%

10%

10%

40%

Additional rate

45%

10%

10%

45%

The threshold for the higher rate of tax in Scotland

For the tax year 2017/18, a higher-rate Scottish taxpayer will pay more tax, because the Scottish higher rate tax band is lower than that in the rest of the UK. Scottish taxpayers pay higher-rate tax once their income goes over £43,000 - but for an English, Welsh or Northern Irish taxpayer, the threshold is £45,000.

Who qualifies as a “Scottish taxpayer”?

A Scottish taxpayer is a taxpayer who lives in Scotland. If you live in England you’ll be an English taxpayer, even if you work for a Scottish employer.

Scottish taxpayers have an ‘S’ at the start of their tax code, for example, S1150L for the 2017/18 tax year, whereas in the rest of the UK the corresponding code is 1150L.

Got questions? Ask Emily!

FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.